Financial Services SpeedRead: 10 April 2026 edition

2. UK Supreme Court hands down judgment on authorised persons' responsibilities for appointed representative activities (Kession Capital Ltd v KVB Consultants Ltd and others)

On 27 March 2026, the FCA published its observations of good and poor practice with respect to firms' compliance with operational resilience rules, one year on from the end of the transition period on 31 March 2025. Overall, the FCA observed that firms had done a significant amount of work before the end of the transition period to strengthen their operational resilience, and firms continue to show strong engagement and good progress in meeting the requirements.

Key observations from the FCA include:

• mapping should extend beyond technology to include facilities, people, processes, information, and third-party resilience outcomes;
• some firms claim there is no scenario they cannot recover from, without providing evidence of sufficiently severe testing; 
• communications strategies require more testing, including contingency planning for the loss of usual communication channels; and 
• further work is needed on identifying, assessing, and remediating third-party vulnerabilities. 

The FCA expects firms to consider and apply the guidance provided, even if not in scope of the operational resilience rules. The FCA expects firms to take a dynamic approach, embedding operational resilience into how they design products and services rather than treating it as a standalone compliance exercise.

Banking and Prudential

No recent updates.

Fund Management

No recent updates.

Senior Managers and Governance

4. FCA publishes webpage on non-financial misconduct in financial services

On 23 March 2026, the FCA published a webpage on the new rules being introduced to tackle non-financial misconduct (NFM) in financial services, ahead of the changes coming into effect on 1 September 2026. For more information on the FCA's policy statement on NFM, please refer to our previous SpeedRead publication here.

The FCA reminds firms that prior to the commencement date, they should review their approach to staff policies, conduct breach reporting, fit and proper assessments, regulatory references, and ensure staff and managers understand how the changes apply to them. 

On 26 March 2026, the Government published the draft statutory instrument, Money Laundering and Terrorist Financing (Amendment) Regulations 2026 (the Draft SI), after it was laid before Parliament on 25 March 2026. The Draft SI proposes to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, with the aim of strengthening AML controls, and has been developed to implement the Government's response to HM Treasury's 2024 consultation on improving the UK's anti-money laundering and counter-terrorist financing regime, ensuring compliance with Financial Action Task Force (FATF) standards.

Under the Draft SI, mandatory enhanced due diligence for high-risk jurisdictions is narrowed to FATF "Call for Action" countries, and euro-denominated thresholds are converted to sterling. The sale of off-the-shelf firms is brought within regulated trust or company service provider activity, and cryptoasset business provisions are strengthened, including counterparty due diligence for correspondent relationships.

Once approved, the statutory instrument will come into force 21 days after it is made, with longer implementation periods for certain cryptoasset-related requirements. 

On 27 March 2026, the FCA published a Final Notice fining Dinosaur Merchant Bank Limited (DMBL) £338,000 for failing to establish effective systems to detect and report suspicious trading in its CFD business. In June 2024, DMBL introduced a new order platform that significantly increased CFD trading but failed to ensure trades were captured by its surveillance system.

Key findings in the Final Notice include:

• between June and October 2024, 2,194 trades worth approximately $3.05 billion were not registered into DMBL's automated surveillance system; 
• DMBL failed to conduct a risk assessment despite a 45% increase in weekly CFD trading volumes following introduction of the new platform;
• the firm lacked adequate written policies for the review and escalation of surveillance alerts and for alert calibration; and 
• management information provided to the board was insufficient to identify surveillance system failures at the earliest opportunity.

Retail Services

7. FCA publishes directions on temporary permissions regime for deferred payment credit

On 2 April 2026, the FCA published directions under the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 (SI 2025/859) setting out the process for deferred payment credit (DPC) lenders to register for temporary permission. The directions support the transition of DPC, commonly known as buy now pay later, into FCA regulation, under which DPC agreements provided by third-party lenders will become regulated credit agreements from 15 July 2026. For an overview of the FCA's rules published in February 2026, please see our previous Financial Services SpeedRead here.

On 30 March 2026, the FCA, Solicitors Regulation Authority, Information Commissioner's Office (ICO) and Advertising Standards Authority announced the launch of a joint taskforce to address the poor handling of motor finance claims by some claims management companies (CMCs) and law firms. The announcement comes as the FCA prepares to set out its final motor finance compensation scheme.

The press release sets out the following key points:

• the regulators will share intelligence and take co-ordinated action to tackle unsolicited and misleading advertising, meritless claims, multiple representation and unfair exit fees;
• the FCA has already removed or amended 800 misleading adverts and enabled over 28,000 consumers to exit CMC contracts free of charge; and
• three CMCs have reduced unreasonable fees, protecting over 500,000 consumers, with formal investigations also under way.

The FCA's motor finance redress scheme will be free for consumers to use without the need to instruct a CMC or law firm.

9. FCA publishes policy statement on motor finance redress scheme

On 30 March 2026, the FCA published a policy statement (PS26/3) on the motor finance consumer redress scheme, setting out its final rules requiring firms to compensate consumers treated unfairly between 2007 and 2024. The policy statement followed the FCA's consultation paper CP25/27 and judgments in the Supreme Court and High Court concerning widespread failures by firms to adequately disclose commission arrangements in motor finance agreements. The FCA estimates total redress of £7.5 billion. For an overview of the FCA's CP25/27, please see our previous Financial Services SpeedRead here. 

Under the policy statement, the FCA confirms various changes following feedback to CP25/27:

• the scheme is split into Scheme 1 (6 April 2007 to 31 March 2014) and Scheme 2 (1 April 2014 to 1 November 2024);
• implementation periods of five months (Scheme 1) and three months (Scheme 2) have been introduced;
• eligibility has been tightened, including de minimis commission thresholds and the exclusion of high-value agreements; and
• captive and white-label tied arrangements with franchised dealers are excepted where visible branding links existed.

The scheme rules came into force on 31 March 2026. Scheme 2's implementation period ends on 30 June 2026 and Scheme 1's implementation period ends on 31 August 2026. 

10. FCA and ICO publish joint statement on regulatory expectations for vulnerability-related data 

On 27 March 2026, the FCA and the ICO published a joint statement on regulatory expectations regarding firms' approaches to vulnerability-related data. The statement aims to support firms to deliver good outcomes for customers in vulnerable circumstances as required under the FCA's Consumer Duty, while complying with UK data protection requirements. 

The statement confirms that UK data protection laws do not prevent firms from sharing or using clients' personal information where it is deemed appropriate and necessary to do so to protect vulnerable consumers. The statement also sets out the following expectations:

• firms should understand characteristics of vulnerability within their customer base and set up systems enabling customers in vulnerable circumstances to disclose their needs;
• firms must identify a lawful basis under the UK GDPR for processing vulnerability-related data, including where special category data is involved. The statement sets out examples of potentially applicable lawful bases under Article 6 GDPR (e.g., Consent, Contract (where processing is necessary to fulfil a contract), Legal Obligation, Legitimate Interest, etc.);
• manufacturers and distributors should collaborate and share relevant information across the distribution chain to deliver good customer outcomes. For example, distributors may share anonymised or aggregated information about customers with vulnerable characteristics with manufacturers, to support product reviews; and
• firms must regularly monitor customer outcomes and investigate where customers in vulnerable circumstances receive worse outcomes than others.

The FCA and ICO will continue to work together to ensure regulatory expectations are clear, including through the Digital Regulation Cooperation Forum and the UK Regulators Network.

11. FCA consults on simplifying the pensions and investment advice rules

On 25 March 2026, the FCA published a consultation setting out proposals to simplify and consolidate the rules governing pensions and investment advice for retail consumers. The consultation forms part of the FCA's Advice Guidance Boundary Review programme and follows feedback to consultation paper CP25/17 concerning proposals for targeted support in the pensions and retail investment markets (for more information on the proposals, please see our briefing here). The consultation also follows feedback to the July 2024 Consumer Duty Call for Input (for more information, please see our briefing here).

The proposals aim to allow firms to offer more simplified forms of advice while maintaining an appropriate level of consumer protection.

The consultation paper sets out the following key proposals:

• consolidating the suitability requirements in COBS 9 and COBS 9A into a single new chapter (COBS 9C), removing distinctions between MiFID and non-MiFID business;
• replacing the requirement to consider "necessary" information with an expectation that advisers consider "sufficient" information when assessing suitability;
• replacing the annual suitability review with periodic reviews based on clients' needs, underpinned by Consumer Duty obligations; and
• opening a discussion on legacy trail commission to modernise the rules and prevent potential consumer harm.

The consultation closes on 22 May 2026. The FCA aims to publish a policy statement in Q4 2026.

On 23 March 2026, the FCA published good and poor practice guidance, setting out relevant considerations for firms when designing consumer segments under the new 'targeted support' framework. The publication follows the FCA's policy statement PS25/22, which introduced rules on a new regulated activity of targeted support, which will enable firms to provide ready-made suggestions to groups of consumers based on shared financial support needs without constituting investment advice.

The FCA provides practical examples to support firms in defining consumer segments and assessing suitability. Key points addressed in the guidance include:

• consumer segments must comprise both including and excluding characteristics, defined at a sufficiently granular level without comprehensively considering a consumer's individual circumstances;
• firms should consider what data is "readily accessible" to the business area providing targeted support, rather than undertaking exhaustive searches of all information held on a consumer. The FCA does not expect detailed searches of all individual customer transactions to align a consumer with the common characteristics of a consumer segment; 
• assumptions used to limit common characteristics must be reasonable, evidence-based, and not material to the suitability of the ready-made suggestion. While firms can choose to make reasonable assumptions to limit the number of common characteristics used, any such assumptions cannot be material to the suitability of the ready-made suggestion made to the customer; and
• firms must not provide a ready-made suggestion where they hold information indicating it may not be suitable for the consumer.

The FCA reminded firms that its pre-application support service is available for firms developing their targeted support offerings.

Digital Finance and Fintech

13. BoE and PRA publish letter on AI innovation in financial services

On 1 April 2026, the BoE and PRA published a letter to the Chancellor and Secretaries of State responding to the Government's letter of 28 January 2026 on enabling safe AI innovation. The letter outlines the BoE and PRA's approach to enabling responsible AI adoption in the financial sector while safeguarding financial stability, and responds to a request to publish a plan and report annually on progress. 

The BoE and PRA will report annually on progress via the PRA's Business Plan and Annual Report.

14. FCA publishes guidance on cryptoasset firm registration under the MLRs ahead of the new FSMA regime

On 26 March 2026, the FCA published guidance for cryptoasset firms considering registration under the Money Laundering Regulations (MLRs) ahead of the new FSMA regime for cryptoasset regulation (expected to commence on 25 October 2027). The guidance outlines the application process and key deadlines for firms that wish to begin trading before the new regime starts, under which firms will need FSMA authorisation. 

The guidance sets out the following key points:

• MLR registration applications submitted to the FCA before 30 September 2026 (when the FSMA gateway opens) will be assessed as normal. If the application is not determined by that date, firms will need to decide whether to apply separately for FSMA authorisation - the FCA will determine the two applications separately, even if they are assessed concurrently;
• after 30 September 2026, the FCA will encourage firms to focus on securing FSMA authorisation rather than applying for MLR registration; and
• firms should not apply for MLR registration after 31 July 2027, as the FCA is unlikely to determine such applications before the new regime starts.

The headline message to firms is that if they intend to apply for MLR registration, they should do so promptly.